Unit 1.3.2

Question 0

What are buyers and sellers?

Answer 0

• Buyers: People or businesses that want to purchase something. They create demand
• Sellers: People or businesses that want to sell something. They create supply

Question 1

What is a market?

Answer 1

A market is any medium in which buyers and sellers interact and agree to trade at a price

Question 2

What is demand?

Answer 2

The amount of good and service that people are willing and able to buy at a given price at a given time

Question 3

What is market demand?

Answer 3

Refers to the sum of all individual demand for a particular good or service. Has to be effective

Question 4

What is the relationship between price and quantity demand?

Answer 4

P ↓QD ↑

QD ↑P ↓

Question 5

What is a demand curve?

Answer 5

The relationship between price and quantity demand. The vertical axis shows the price and the horizontal axis the quality demanded. The demand curve slopes down from left to right

Question 6

What is a movement along the demand curve?

Answer 6

A change in price

Question 7

Explain the shift of the demand curve

Answer 7

• Left (decrease)

- Right (increase)

Question 8

What causes the demand to shift?

Answer 8

• Changes in tastes and fashions
• Changes in income
• Changes in population
• Advertising
• Changes in the price of other goods
• Substitutes and complements

Question 9

What are substitutes and complements?

Answer 9

• Substitutes: goods that can replace another. If the price of the substitute increases the demand curve for the original good shifts to the right
• Complements: goods that are consumed together. If the price a complement decreases the demand curve for the original good shifts to the right

Question 10

What is supply?

Answer 10

The amount of a good or service that producers are willing and able to supply

Question 11

What is market supply?

Answer 11

Refers to the sum of all individual suppliers of a particular good or service. Has to be effective

Question 12

What is the relationship between price and quality supplied?

Answer 12

P ↑QS ↑

QS ↓P ↓

Question 13

What is the supply curve?

Answer 13

The relationship between the price and quality supplied. The vertical axis shows the price and the horizontal axis the quality demanded. The supply curve slips up from left to rihht

Question 14

What is the movement along supply curve?

Answer 14

A change in price

Question 15

Explain the shift in the supply curve

Answer 15

Left (decrease)

Right (increase)

Question 16

What causes the supply curve to shift?

Answer 16

• Change in cost
• Change in the size of the industry
• Imposition of a tax
• Natural phenomena
• New technologies

Question 17

What is the equilibrium point?

Answer 17

The quantity demanded is the same as the quantity supplied

Question 18

What are market forces?

Answer 18

Things that effect supply and demand i.e inflation recession

Question 19

What is market orientation?

Answer 19

Achieved when a business focuses its activities products and services around the wants and needs of the customers

Question 20

Name the benefits of market orientation

Answer 20

• Gives a business competitive advantage
• Brand loyalty may be achieved
• Satisfied customers may recommend product or service
• Increased brand loyalty makes it easier to charge a higher price